Written evidence submitted by Mr Jay Mens, Director at The Middle East and North Africa Forum (UKI0025)

 

 

The Middle East and North Africa Forum (MENAF) is a think-tank based at the University of Cambridge researching the geopolitics and international relations of the Middle East and North Africa.

 

The Four Stages of British-Iranian Relations

  1. The Islamic Revolution transformed Iran from being a British ally to a regional concern. Since 1979, British-Iranian relations have undergone four broad shifts, defined by the disciplinary approach of the United States. This has sought to diminish Iran’s punching power in the Middle East, and the more conciliatory approach of a European bloc led by France and Germany, which has dealt with Iran on its own terms, particularly with respect to trade. Over the past 40 years, British Iran policy has consistently leaned towards the European approach. Yet a fifth, new stage of British-Iranian relations— defined by the Trump Administration and the spread of COVID-19— may provide an opportunity for a change of course. Rather than dealing with Iran on its own terms, the Foreign Office should consider the country within the broader context of British interests in the Middle East.
  2. Discussions about Anglo-Iranian relations often begin with history. This history often begins with the “crafty imperialism” of British oil and railroad concessions at the turn of the 20th Century. Operation Ajax, the coup which overthrew Iran’s populist government in August 1953, is another common starting point. This historiography overlooks that the “point of no return” from which the current state of relations originates is the emergence of a new Iran in 1979. This is not to entirely discount the contribution of British missteps to the current state of affairs, but emphasizes that, like France or Russia after their revolutions, the function of Iran in regional and international politics was completely transformed after 1979. Revolutionary Iran’s foreign policy was, in its first decade, constructed in opposition to the ancien regime, reflecting the animus of Iran’s new government to their deposed pro-Western Shah, Reza Pahlavi. Since this break, British-Iranian relations have played out in four distinct stages: the Revolution, the post-Cold War interlude, the Iraq War and the second Obama administration. Each new stage began at a major juncture in Middle Eastern or international politics, which in turn influenced the alignment of British Iran policy either towards the more conciliatory approach of the European Community/Union, or the containment policy of the United States. 

Juncture One: The Islamic Revolution

  1. The first stage started with the Islamic Revolution itself. The British response to the Islamic Revolution was, at first, highly guarded. The United States pressured the UK to respond to the Iran hostage crisis of November 1979 by closing its embassy or by freezing Iranian assets, although the British Government followed through with neither. British companies had hundreds of millions worth of oil contracts, as well as interests in infrastructure development and the automotive industry. The immediate British response to the Revolution was coordinated with the European Community, both out of a belief that the EC had more leverage over Iran due to its larger net trade volume, as well the EC’s much less antagonistic relationship with Iran. After the United States broke off relations with Iran on 7 April 1980, the Europeans did not immediately follow suit although implemented limited sanctions in May. Sanctions only applied to new contracts, an accommodating option for a British government prioritising economic relations. 

 

Juncture Two: From Revolution to Proliferation

  1. The end of the Cold War between 1989 and 1991 is a good point at which to demarcate the second juncture, which coincides with the end of the Iran-Iraq War, the onset of the Gulf War and the collapse of the Soviet Union. Iranian foreign policy had been postulated on Ayatollah Khomeini’s maxim “neither East, nor West, but an Islamic Republic” (na sharghi, na gharbi, jomhuri-ye-eslami). The collapse of the Soviet Union meant that Iran could no longer entertain the prospect of pivoting between both sides of the Cold War, triggering a shift in both Iran’s policy towards the West and Europe’s policy towards Iran. The Gulf War was an incentive for Britain and Iran to reach out to one another, Iran being a neighbour of Iraq. The European Community moved to initiate a ‘critical dialogue’ with Iran at the end of 1992, coupling economic incentives with Iranian shifts on matters such as terrorism and human rights. This came ahead of the activation of the Maastricht Treaty in 1993, which included a Common Foreign and Security Policy that further consolidated British alignment with Europe on matters pertaining to Iran.

 

 

  1. In May 1997, Mohammad Khatami, who ran on a reformist ticket, took the presidency in a surprise win. Khatami supported Iran taking a less antagonistic stance towards the EU and managed to achieve a “diplomatic resolution” to the fatwa declared against British author Salman Rushdie. This guaranteed that the Iranian government would no longer pursue or encourage Rushdie’s “execution”. In the same month, relations with Britain were upgraded to the ambassadorial level. The rapprochement developed further when the Iranian and British foreign secretaries held their first reciprocal visits since the Revolution in January 2000 and September 2001, respectively. Yet a significant break came in August 2002, when the National Council of Resistance of Iran (NCRI) claimed that Iran was constructing two secret nuclear facilities in Natanz and Arak. These revelations coincided roughly with the build-up to the Iraq War, giving us a clear point at which to demarcate the third juncture in the relationship.  

 

Juncture Three: Rapprochement in Reverse

  1. As Saddam’s Iraq swiftly fell in 2003, the key cause of Iran’s rapprochement with the West fell with it. After the nuclear revelations, Iran was classified as part of the “axis of evil”. This issue dominated Iran’s relations with the world, and with the United Kingdom, for roughly another decade. Iran came under increasing scrutiny for its role funding and equipping Shia militias in Iraq, which in turn attacked British and American troops. As the Iraq War’s sectarian dimension grew more acerbic, violent demonstrations began outside the British Embassy in Tehran from May 2004 onwards. The UK sided with France and Germany to form the E3, seeking to find a diplomatic path out of the crisis. The United Kingdom was instrumental in bringing the United States into the E3 in May 2006, and after China and Russia joined the grouping, it became the P5+1 that we know today. 
  2. Relations began to deteriorate during the premiership of antagonistic hard-liner Mahmoud Ahmedinejad from 2005 to 2013, and by December 2006, the UK co-drafted a Security Council resolution imposing sanctions on Iran for its nuclear program. The IAEA reported in November 2011 that Iran had attempted to weaponise its nuclear program, leading the UK to ban British financial institutions from doing business with Iranian banks. Iran in turn downgraded its relations with the UK and the British Embassy in Tehran was attacked at the end of the month leading to its closure. After 2012, the EU imposed an oil embargo on Iran in concert with the U.S, on a sector covering roughly 20% of Iran’s total exports, aiming to bring Iran back to the table. This was enabled by the election of U.S. President Barack Obama to a second term and the election of another Iranian ‘reformist’, Hassan Rouhani, in 2013. 

 

Juncture Four: Multilateral Approaches and the JCPOA

  1. The second Obama administration pursued a multilateral approach at rapprochement with Iran. The Administration thus made reaching an accord with the Islamic Republic a key foreign policy priority. Pressure in Iran had reached a high point, with inflation broaching 30% by late 2012, subsidies being cut and anti-regime protests simmering. The ‘resistance economy’ (eghtesad-e-moghavemati) of Ahmedinejad, too, saw Iran’s paramilitary force, the Revolutionary Guard, significantly consolidate its economic and political clout, creating a perceived internal counterweight to the power of the Ayatollah. When the effects of sanctions became fully palpable, and with Rouhani in the Presidency, Iran was able to commence talks with the P5+1 in February 2014 and the Joint Comprehensive Plan of Action (JCPOA) was reached in July 2015. 
  2. Iran agreed to a long-term deal on its nuclear programme, limiting its sensitive nuclear activities and allowing in international inspectors in return for the lifting of sanctions. This was short lived, as the Trump administration pulled out of the JCPOA in May 2018, reinstating all US sanctions. Despite Brexit, the British government sided with France and Germany to support the continuation of the JCPOA in a significant digression from American policy. The UK supported the creation of INSTEX (Instrument in Support of Trade Exchanges), a special-purpose financial vehicle to facilitate non-USD transactions with Iran to circumvent sanctions. Yet as Iran reduced its commitment to the JCPOA under the weight of US sanctions, particularly on oil, the E-3 began to backtrack and in January 2020, foreign secretary Raab joined his European colleagues in threatening to “snap back” sanctions. 

 

The Historical Record

  1. A review of UK-Iran relations since the Islamic Revolution show several tendencies in British Iran policy which have been consistent throughout the four stages. The first is a propensity to side with Europe over the United States, British policymakers having less of an appetite for diplomatic collision with Iran and generally being more sensitive to the economic implications of confrontation. Since 1979, the UK has worked with European partners, particularly France and Germany, to create an ostensibly moderate Iran policy. The E-3 has been understood as a means through which Britain could avoid subordinating its foreign policy entirely to the United States. Yet despite this, there is a second overwhelming trend, namely for the UK to eventually fold to American pressure. 
  2. At the first juncture, British reticence to break ties with Iran eventually collapsed under American diplomatic pressure on the UK paired with Iran’s growing antagonism towards the “West” at large. At the second juncture, the collapse of the Soviet Union, and the onset of the Gulf War and the Afghan War provided an opening for the UK to move closer to Iran as the US trained its anger against Saddam’s Iraq. At the third juncture, American concern for the nuclear issue overrode British and European attempts at moderation, and that issue was eventually elevated to the top of the hierarchy of British and European foreign policy concerns. At the same time, Britain’s alliance with the United States in Iraq meant that British soldiers were fighting Shi’a militias armed and funded by Iran. When the Obama Administration adopted a more conciliatory approach towards Iran, the Europeans had the necessary room to manoeuvre and successfully conclude the JCPOA. Yet the scuttling of the agreement by the Trump Administration saw the UK trailing behind the United States again, initially trying with European partners to hold the deal together before eventually threatening to reintroduce sanctions and airing support for a potential “new deal” which, unlike the JCPOA, would take into account Iran’s role in the region and support for proxies. 
  3. British Iran policy since 1979 has had its pros and cons: On the one hand, the UK has engaged with Iran in a way that the United States has not, in some instances playing a key role in drawing the United States into multilateral action, as was the case in 2006. The UK has also managed to accrue moderate commercial benefits, exporting more than £200 million to Iran in 2017 and 2018. On the other hand, this incongruous approach has mostly resulted in failure. The United States’ economic clout and position in the region at large has meant that European-led attempts at dissent have mostly resulted in failure, either because the United States has marshalled its weight against Iran, European partners’ failure to agree on a unified approach, or because the United States has pressured its European partners to fall in line. Moreover, insofar as Britain and the US share regional policy goals, Britain’s regional policy inevitably means collision with Iran on several key counts. Direct confrontations in the region were most pronounced during the Iraq War, and now span security in the Gulf as well as stability in Iraq and Lebanon. This is as opposed to France and Germany, which are less entangled with, and less invested in, American positions in the Middle East. The British approach towards Iran over the last 40 years can broadly be characterized as following American cues in the region at large while attempting to balance these with a multilateral, European approach with respect to Iran.
  4. The fifth stage of Britain’s relationship with Iran is now defined by the Trump administration’s scuttling of the JCPOA and the still-unforeseen political consequences of COVID-19. The most important influence on the future of Iranian foreign policy is the US election in November. The election of Joe Biden or indeed, Bernie Sanders to the presidency would doubtless augur a sixth stage, and the re-election of Donald Trump would result in escalation. As much as European partners have attempted to present Iran with an alternative Western front to the United States, nothing bears on the future of the relationship as much as the upcoming American election. Iranian policymakers have calculated their actions with this fact in mind and the Foreign Office would do well to do the same with respect to Iran. In the meantime, American sanctions will have a significant bearing on Iran’s behaviour in the region and in turn, Iran will continue to affect the stability of the region.

 

A Broader Regional Context

  1. It is crucial to view Iran within the wider context of the Middle East; while this may seem simplistic, this would be a digression from the European approach, which tends to view Iran as being on its own terms. The geopolitics of the Middle East are today characterised by the tension between Iran and Saudi Arabia, and their allies in the region. Saudi Arabia and its allies, through their largesse and international influence, are attempting to beat back Iranian influence in the region, particularly in Syria. Iran, meanwhile, continues to arm, fund and advise proxies across the region, especially in Lebanon, Syria and Iraq, despite being economically crippled and now beleaguered by COVID-19. Iran’s decision to continue its regional activities in such adverse circumstances stems from a desire for leverage and room to manoeuvre where it has little of either. Needless to say these activities are severely destabilizing for the region, particularly at such a delicate time.
  2. How the UK chooses to engage with Iran, particularly as Iran looks set to return a hardliner to power, is thus of particular importance. Incumbent President Hassan Rouhani is ineligible to run for another term in the 2021 election and his legacy has been left in tatters by the collapse of the JCPOA, the freefalling economy and above all, his government’s response to COVID-19. Turnout for parliamentary elections in February was at a historic low and hardliners swept Iran’s parliamentary elections last year. The return of hardliners to government could also trigger as Iran escalates the force and scale of its regional operations, and possibly attempts to secure a nuclear weapon as an insurance policy.
  3. The UK should also be more open to receiving inputs from its Gulf partners, particularly in light of the fact that their trust and security is a significant British stake in the region.

Economic Considerations

  1. On the economic front, it is important to begin by noting the relative insignificance of UK-Iranian trade, which has been in decline since the burning of the embassy in Tehran in 2011 and has not significantly picked up again, despite the restoration of ties in 2016.
  2. While attempts have been made to expand trade, with the UK trade commissioner for the Middle East Simon Penney visiting Iran in 2019, current sanctions alongside regime instability, have made it almost impossible to move forward with bilateral trade initiatives. Iranian oil imports are similarly not a consideration, with most oil exported to China or South Korea and almost none reaching the UK or EU markets.
  3. Meanwhile, the trading relationship between the countries of the Gulf Cooperation Council (GCC) and the UK is significantly more important than that between the GCC and any European state. The GCC is the UK’s third largest export market after the US and EU, at over £40 billion; this is double British exports to the GCC in 2015. The UK is also the leading destination for Gulf investment in Europe, particularly important in the post-Brexit world.

 

Security Concerns

  1. There is also an important strategic dimension to Britain’s relationship with the Gulf states, namely three bases which contribute significantly to Britain’s global presence.
  2. HMS Jufair in Bahrain opened in 2018 and is the main staging ground for Operation Kipion, the UK’s peacekeeping mission in the Persian Gulf. Since 2019, Oman has hosted a Joint Logistics Support Base, which now plays a significant role in facilitating a British presence in the Indian Ocean. These economic and strategic factors both underscore the importance of an approach which maintains British credibility in the region at large and further reassures Britain’s allies of its commitment to their security. It is also worth noting that France is the only other European country with a base in the Gulf (in the UAE), although France’s economic interests in the Gulf are slim in comparison to those of the United Kingdom.
  3. In this sense, the United States’ economic and strategic stake in the Gulf more closely mirrors the distribution of British interests in the region.

UK: An Ally and Intermediary

  1. The UK has often taken a middle road between the U.S. and the European states. While the general alignment of has led to confusion, in certain instances British digression has allowed it to act as a broker. 
  2. One such example is the INSTEX mechanism, put in place by the UK and European partners. This mechanism enables EU states and the UK to trade humanitarian items with Iran, such as food, medical equipment and pharmaceuticals, through a virtual ledger that offsets balances and circumvents bans which might otherwise be exposed to U.S. secondary sanctions.
  3. Initiatives such as INSTEX do not stand in contrast with U.S. interests, but rather provide Britain with the leverage to deal with Tehran in a way that the U.S. cannot.

The UK and Europe 

  1. Just as important in formulating effective short, medium and long-term foreign policy strategies are bilateral and multilateral ties with European partners such as France and Germany.
  2. The institutional framework of the UN Security Council and the P5+1 will prove most important in coordinating future multilateral efforts. In this regard, losing access to EU security and defence mechanisms such as Permanent Structured Cooperation (PESCO) or the European Defence Fund will not represent a significant loss.

France and Gulf Security

  1. In the long term, the need to ensure the security of the UK’s allies in the Gulf highlights the need for a bilateral collaboration effort with France.
  2. EU Member States do not have nearly comparable economic or strategic interests in the Gulf region, although France is an exception here.  France exports significant quantities of arms to Saudi Arabia, the UAE, Qatar and Kuwait, and has frequently resisted German calls for a more lenient policy towards Iran sanctions.
  3. France has moreover taken an active stance in the Middle East, notably in Syria, where it has lobbied the US to resist withdrawing from the North-East to prevent the entrenchment of Iranian influence. France is also an active player in Lebanon, where its financial role is important in opposing Iranian entrenchment.
  4. France also maintains a permanent base with 600 troops in the UAE and has taken the lead in coordinating European naval patrols in the Straits of Hormuz
  5. As the country with significant interests and a presence in the Gulf, France is the UK’s most viable partner on Iran-related issues. It would be advisable to engage in enhanced dialogues with France on matters pertaining to relations with Iran and, more broadly, containing Iranian influence in the region.

Cautious Optimism

  1. Since the Islamic Revolution, British policy towards Iran has tended towards a multilateral European approach. Another major juncture in UK-Iran relations grows increasingly likely ahead of pivotal American and Iranian elections in 2020 and 2021, it would be wise to prepare British policy for yet another juncture.
  2. The United Kingdom’s approach should be to take a proactive role by acting in much closer concert with the United States and the Gulf states, given the coincidence of their interests in the region and the pre-eminence of the United States in determining Iranian policy vis-à-vis the West. The UK is in a position to play a significant role in the Middle East as both a player and as a broker and should prepare itself accordingly.

 

April 2020